Despite concerns over the sinking Millennium Tower, a city committee approved spending $6.8 million to advance work on the neighboring Transbay Transit Center, an envisioned transit hub with a Caltrain extension and high-speed rail.

While the developer blames the Transbay Joint Powers Authority’s work on the nearby Transbay Center for the sinking of San Francisco’s tallest residential building, the agency faults the developer for using an inadequate design. Both a lawsuit and city investigations are looking into the dispute.

Amid these unresolved questions, Supervisor Aaron Peskin, who sits on the San Francisco County Transportation Authority Plans and Programs Committee, had requested the committee not allocate the $6.8 million in Proposition K sales tax funding for the second phase of the Transbay Transit Center.

The multi-billion dollar Transbay project would extend Caltrain to the transit center and planned high speed rail connecting San Francisco to Los Angeles come 2025.

But the committee Tuesday approved the money, after the head of the Transbay Joint Powers Authority, which is leading the multi-billion project, said a delay could lead to cost overruns.

The sinking of the swanky 58-story, 400-unit tower has prompted a lawsuit by owners of the multi-million dollar condos and an investigation into the Department of Building Inspection’s role in the development.

Also Tuesday, City Attorney Dennis Herrera subpoenaed the builder’s developer, Millennium Partners, over allegations they may have defrauded condo purchasers by not disclosing the building sunk more than forecasted.

Hours later, Millennium Partners held a news conference alleging the Transbay Joint Powers Authority, which oversees the development in the area, caused the sinking through flawed construction dewatering.

Transbay, however, denies any fault and blames the developer’s choice not to drill the foundation’s piles into the bedrock but instead use less costly shorter piles.

Peskin said “at this topsy-turvy time” the funding postponement was necessary. “I am hopeful that in the next number of weeks that we can get a little bit of — no pun intended – stability in and around Transbay and Millennium.” Supervisors Katy Tang, London Breed, Mark Farrell and John Avalos also sit on the committee.

Peskin’s concerns were also based on the past history of the project. In May, the Board of Supervisors approved a $260 million bailout for the project’s Phase 1, which is now scheduled to be completed in December 2017 with a total cost of $2.259 billion.

“I want to go into this next phase with our eyes very wide open,” Peskin said.

With the cost overruns and other snags resolved on Phase 1, Transbay is now focused on Phase 2. A new estimate has the Phase 2 costing $3.9 billion, up from the 2013 estimate by $900 million. That includes a $161 million underground pedestrian walkway connecting Transbay Transit center to the Embarcadero BART station.

Mark Zabaneh was named earlier this year the acting interim executive director of the Transbay Joint Powers Authority, replacing Maria Ayerdi-Kaplan, who retired amid the concerns over the project’s management.

Zabaneh opposed Peskin’s postponement. “My fear is we would lose quite a bit of momentum if we don’t proceed with approval today,” Zabaneh said.

Zabaneh said that funding would help the agency achieve a fuller project design by May 2017, which would lead to more accurate cost estimates and answer what additional properties are needed to acquire using eminent domain such as around Third and Townsend streets.

Peskin was the only opposing vote on releasing the funding. Farrell was absent for the vote.
Tang acknowledged Peskin’s concerns, but she noted the funding “is just for design.”

Peskin has also called for a hearing Thursday before the Board of Supervisors Government Audits and Oversight Committee to investigate the Department of Building Inspection’s role in the Millennium Tower. He has previously alleged that “political interference” compromised that department’s function.

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